Thursday, June 16, 2011

LEVY OF SERVICE TAX ON SERVICE PROVIDED BY A/C RESTAURANTS HAVING LICENSE TO SERVE LIQUOR & HOTELS PROVIDING ACCOMODATION CHALLENGED IN THE HIGH COURT

By the Finance Act, 2011 amendment has been made to the Section 65 Clause 105 of Chapter V of the Finance Act whereby the service provided or to be provided to any person by (1) restaurant, by whatever name called, having the facility of air-conditioning in any part of the establishment, at any time during the financial year, which has licence to serve alcoholic beverages, in relation to serving of food or beverage, including alcoholic beverages or both, in its premises and (2) hotel, inn, guest house, club or camp-site, by whatever name called, in relation to providing of accommodation for a continuous period of less than three months; are brought under the definition of taxable service.
The constitutional validity of the aforesaid amendment is challenged before the Honourable High Court of Kerala by various Hotels and Restaurants. The Honourable High Court has admitted the writ petition and has issued urgent notice to the respondents therein. The Honourable Court has further granted stay against any coercive steps for recovery of service tax or agaisnt any proceedings for imposing penalty for a period of 2 months.